Chitosan is a renewable, biodegradable, bioadvective, bioactive, sustainable and versatile biopolymer comprising unique characteristics such as crosslinking, film-forming properties, complexing, chelating, hydrophilicity, crystallinity, ionic conductivity, entrapment, adsorption, high viscosity etc. Crustacean waste contains higher levels of chitin, around 13–42% and deacetylation of chitin leads to chitosan. Chitosan is randomly distributed with β-(1–4) linkage or D units responsible for undergoing structural confirmation under acidic conditions to produce a wide range of functional groups within the chitosan skeleton and adopt several conformations with improved functional and physicochemical properties. Considering all these properties, chitosan is a biopolymer that can be applied in the fabrication of active, intelligent, and edible food packaging films that are used to maintain and improve the conditions of packaged foods by extending their shelf life and monitoring the packed foods. Adding the bioactive compound to the chitosan-based film-forming solution significantly improves the final film barrier and mechanical, thermal, and functional properties with potent antioxidant and antimicrobial activity. Therefore, in this chapter, considering all these factors, this attempt has been made to profile the crustacean waste sources of chitosan along with their extraction procedure and different applicability in food packaging.